T
he Los Angeles Chargers could be taking advantage go a major opportunity. Since the NFL changed its investment rules to allow institutional capital to own minority stakes in teams, some franchises have begun to explore that option. And now, the Chargers could add themselves to that list as it has been reported that the team is discussing selling a minority stake to Arctos Partners— a major private equity firm.
So far, there are only four private equity firms that have been approved by the NFL to own shares of teams. And while the Chargers have talked with all four, the discussions with Arctos have gone the best. Having a private equity firm own a share of the team could work to the Chargers’ advantage, with good and solid investors potential helping the organization thrive even more.
The New NFL Investment Rules
The rules set forth by the NFL when it comes to investors are brand new, with this being the second season for the new rules. Last August, during an owners meeting, the NFL’s owners agreed to loosen its ownership rules– which had been known to be among the strictest in professional sports. Now, private equity firms can own as much as 10% of any given team. In the Chargers’s case, while talks with Arctos have looked promising, it is still very possible that nothing will come of it.
“Arctos was one of the first two private equity firms to buy a stake in an NFL franchise, purchasing a 10% stake in the Buffalo Bills in December,” Randall Williams wrote in an article on Fortune.com. “Miami Dolphins owner Stephen Ross also sold a 10% stake in the Dolphins, Hard Rock Stadium, the Miami Grand Prix and the Miami Open tennis tournament, to Ares Management at an $8.1 billion valuation.”
There is still a lot of discussions still to be had, but a private equity firm owning part of the Chargers could do wonders.
Arctos Background
A relatively new company, Arctos was founded in 2019 in Dallas, and is led by the managing partners– Ian Charles and David O’Connor. Predominately known for their sports focus, Arctos dedicates itself to investing in sports teams and helping franchise owners thrive. One of the best known sports-centric firms, it is the first company to get approved for investing in all five major North American sports leagues- the NFL, MLB, NBA, NHL and the MLS.
Among the sports teams that Arctos has investments in include the Golden State Warriors, Los Angeles Dodgers, Chicago Cubs and the Pittsburgh Penguins. But interest in the Chargers comes as no surprise. Under the ownership of Dean and Alex Spanos, there have been some very tough years, and after Alex Spanos’ death in 2018, it has become even more of a struggle. Most notably, Dea Spanos Berberian, Dean’s brother, was in a long dispute with her family and the Chargers franchise, eventually resolving it in 2021 when she sold her 24% stake.
Sports franchise ownership is a tricky business, but with the new rules implemented, some of the pressures from owning a pro sports team today could be alleviated.
Chargers Looking to Sell Share of Team to Private Equity Firm: Report